Consensus Cloud Solutions, Inc. (NASDAQ:CCSI) shares have had a horrible month, losing 25% after a relatively good period beforehand.    For any long-term shareholders, the last month ends a year to forget by locking in a 59% share price decline.  

Since its price has dipped substantially, Consensus Cloud Solutions' price-to-earnings (or "P/E") ratio of 4x might make it look like a strong buy right now compared to the market in the United States, where around half of the companies have P/E ratios above 17x and even P/E's above 32x are quite common.  Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so limited.  

Recent times have been pleasing for Consensus Cloud Solutions as its earnings have risen in spite of the market's earnings going into reverse.   It might be that many expect the strong earnings performance to degrade substantially, possibly more than the market, which has repressed the P/E.  If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.    

NasdaqGS:CCSI Price to Earnings Ratio vs Industry March 1st 2024

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Consensus Cloud Solutions.

Is There Any Growth For Consensus Cloud Solutions?  

There's an inherent assumption that a company should far underperform the market for P/E ratios like Consensus Cloud Solutions' to be considered reasonable.  

If we review the last year of earnings growth, the company posted a worthy increase of 8.0%.   Still, lamentably EPS has fallen 35% in aggregate from three years ago, which is disappointing.  Therefore, it's fair to say the earnings growth recently has been undesirable for the company.  

Turning to the outlook, the next year should generate growth of 2.2%  as estimated by the six analysts watching the company.  That's shaping up to be materially lower than the 12% growth forecast for the broader market.

In light of this, it's understandable that Consensus Cloud Solutions' P/E sits below the majority of other companies.  Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.  

The Bottom Line On Consensus Cloud Solutions' P/E

Having almost fallen off a cliff, Consensus Cloud Solutions' share price has pulled its P/E way down as well.      Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

We've established that Consensus Cloud Solutions maintains its low P/E on the weakness of its forecast growth being lower than the wider market, as expected.  Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises.  It's hard to see the share price rising strongly in the near future under these circumstances.    

We don't want to rain on the parade too much, but we did also find 3 warning signs for Consensus Cloud Solutions (2 can't be ignored!) that you need to be mindful of.  

It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.